1. MICROECONOMICS

2. SSEMI1 The student will describe how households, businesses, and governments are interdependent and interact through flows of goods, services, and money.
a. Illustrate by means of a circular flow diagram, the Product market; the Resource market; the real flow of goods and services between and among businesses, households, and government; and the flow of money.
b. Explain the role of money and how it facilitates exchange.

3. a. Illustrate by means of a circular flow diagram, the Product market; the Resource market; the real flow of goods and services between and among businesses, households, and government; and the flow of money
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4. Circular Flow
Market Economy
Mixed Economy

5. b. Explain the role of money and how it facilitates exchange.
MONEY IS:
A medium of exchange
A unit of account
A store of value
In our economy, money is the most effective medium of exchange when purchasing goods.
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6. SSEMI2 The student will explain how the Law of Demand, the Law of Supply, prices, and profits work to determine production and distribution in a market economy.
a. Define the Law of Supply and the Law of Demand.
b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.
d. Explain how prices serve as incentives in a market economy.

7. a. Define the Law of Supply and the Law of Demand.
LAW OF SUPPLY: Higher Price = Higher Quantity Supplied (direct relationship)
LAW OF DEMAND: Lower Price = Higher Quantity Demanded (inverse relationship)

8. b. Describe the role of buyers and sellers in determining market clearing price.
c. Illustrate on a graph how supply and demand determine equilibrium price and quantity.

9. d. Explain how prices serve as incentives in a market economy.
The price is the amount of money needed to buy a particular good or service.
In a market, the price and quantity exchanged are determined by the interaction of demand and supply.
Changes in demand or supply alter the price as well as the quantity bought and sold at that price.

10. SSEMI3 The student will explain how markets, prices, and competition influence economic behavior.
a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.
c. Define price elasticity of demand and supply.

11. a. Identify and illustrate on a graph factors that cause changes in market supply and demand.
Changes in SUPPLY or DEMAND (not quantity supplied or quantity demanded) cause the supply or demand curve to shift.
Increase in Supply or Demand: Curve shifts right
Decrease in Supply or Demand: Curve shifts left

12. Factors that change demand Factors that change supply
Population
Income
Consumer tastes
Price of complements
Price of substitutes
Expectations of a change in price
Cost of inputs
Technology
Government Regulation
Taxes
Subsidies
Expectations of a change in price

13. b. Explain and illustrate on a graph how price floors create surpluses and price ceilings create shortages.

14. SURPLUS SHORTAGE Price above equilibrium Qd < Qs
Price below equilibrium
Qd > Qs

15. Price Ceiling Price Floor legally established maximum price.
Governments enact price ceilings when they fear that the price might be higher than they desire it to be.
Creates a shortage
Example: rent-control
Price Floor
is a legally established minimum price.
Governments enact price floors when they fear that the price might be lower than they desire it to be.
Creates a surplus
Examples: farm products and the minimum wage.

16. c. Define price elasticity of demand and supply.
elasticity of demand is the way of measuring how much quantity demanded will change in response to a change in price.

17. SSEMI4 The student will explain the organization and role of business and analyze the four types of market structures in the U.S. economy.
a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.
b. Explain the role of profit as an incentive for entrepreneurs.
c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.

18. a. Compare and contrast three forms of business organization—sole proprietorship, partnership, and corporation.
Sole Proprietorship
Partnership
Corporation
Most Common
Easiest to start
Unlimited liability
Two or more owners
Easy to secure funding & risk is shared
Business is a legal entity, separate from its owners
Most complex to start
Can sell stock to raise money

19. b. Explain the role of profit as an incentive for entrepreneurs.
Profit (making money) is the incentive for entrepreneurs to start new businesses and invent newer and more cost-effective ways of producing goods.
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20. c. Identify the basic characteristics of monopoly, oligopoly, monopolistic competition, and pure competition.
Perfect Competition
Monopolistic Competition
Oligopoly
Monopoly
# of Sellers
Many
Few (2-4)
One
Variety of Goods
None
Some
Control over price
Total
Barriers to Entry
Few
High
Complete
Examples
Apples
Jeans
Airlines
NFL